Baldevraj Jammuram Ahuja, Surat V. Income Tax Officer, Ward 1(2)(1), Surat

ITA 178/SRT/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2040 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-03-2022
• Assessment Year: 2008-2009
• Appeal Filed On: 17-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGHLA
• Keywords: Reopening of assessment; Income from undisclosed sources; Search and seizure; Principle of natural justice; Opportunity of cross examination; Accommodation entries; Bogus loan; Reassessment proceedings; Set aside
• Section: 147; 68; 148; 143(3); 142(1); 251; 143(2); 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकरअपीलसं./ITA No.178/SRT/2017 (Ǔनधा[रणवष[ / Assessment Years: (2008-09) (Virtual Court Hearing) Baldevraj Jamnuram Ahuja, Shop No.B/4073, Millenium Tex Market, Ring Road, Surat-395002. Vs. The ITO, Ward-1(2)(1), Surat. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAZPA7998J (Assessee) (Respondent) Assessee by : Ms Rushi Parekh, AR Revenue by : Ms Anupama Singhla, Sr. DR स ु नवाईकȧतारȣख/ Date of Hearing : 14/03/2022 घोषणाकȧतारȣख/Date of Pronouncement : 25/05/2022 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2008-09, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-2, Surat [in short “the ld. CIT(A)”] in Appeal No. CAS/2/164/2016-17 dated 27.07.2017, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as the “Act”] dated 17.03.2016. 2. Grounds of appeal raised by the assessee are as follows: “1. That the CIT(A) erred in confirming addition of Rs.2,00,000/- u/s. 68. 2. That the CIT(A) erred in disallowing the Interest Expenses of Rs.1,067/- on Unsecured Loan. 3. That CIT(A) erred in confirming the reopening u/s 147 as proper & justified. 4. That CIT(A) erred in not deciding the issue of non-furnishing of statement of Praveen Jain to assessee and non-giving opportunity of cross examination of Praveen Jain which is in violation of principles of natural justice. Page | 2 ITA.178/SRT/2017/AY.2008-09 Late Baldevraj Jamnuram Ahuja 5. The assessee craves to add, alter, amend, delete/change or modify any or all the grounds of appeal at the time of hearing.” 3. Brief facts qua the issue are that assessee filed Return of Income for the A.Y.2008-09 on 16.09.2008 showing total income of Rs.4,79,020/-. There was information that the assessee has obtained accommodation entries of bogus purchase from various concerns of Shri Bhanwarlal Jain. A search and seizure action was carried out in the case of Shri Bhanwarlal Jain & Shri Rajesh Bhanwarlal Jain (sons of Shri Bhanwarlal Jain) on 01.10.2013 by the DGIT(Inv.), Mumbai covered name sake, dummy directors, partners, proprietors of various concerns that were being actually managed by Shri Bhanwarlal Jain, Rajesh Bhanwarlal Jain and Manish Bhanwarlal Jain (herein after referred to as Bhanwarlal & Family). These group concerns were believed to be concerns actively involved in providing non-genuine purchase bills and also unsecured loan accommodation entries to various interested parties. As a result of the search and seizure action it was conclusively proved that these diamond concerns are only paper based with no real business activities. From the details and evidences made available on record, it was obseerved that Shri Praveen Kumar Jain has given the following accommodation entries of bogus unsecured loan during the F.Y.2007-08 to Shri Baldevraj Jannuram Ahuja, Prop of M/s Pooja Enterprise. The details of which given as under: Name of the entry provider Amount M/s Natasha Enterprise, PAN – AIPPP6372H Rs.2,00,000/- On verification of the Return of Income filed by the assessee, it is noticed that the assessee has disclosed unsecured loans of Rs.12,34,957/- which includes the bogus loan of Rs.2,00,000/- taken by way of accommodation entry from M/s Natasha Enterprises, a concern totally controlled by Praveen Kumar Jain. Thus, this amount of Rs.2,00,000/- is actually not an unsecured loan but income of the assessee for the year under consideration in disguised of unsecured loan. This amount of Rs.2,00,000/- is not offered for taxation by the assessee for the year under consideration. Therefore, action under section 147 of the Act was initiated by Page | 3 ITA.178/SRT/2017/AY.2008-09 Late Baldevraj Jamnuram Ahuja assessing officer, after recording reasons for escapement of income. Accordingly, notice under section 148 of the Act was issued on 24/03/2015, which was duly served upon the Assessee. Vide submission dated 20/04/2015, the Assessee has filed the return of income declaring total income of Rs.4,79,020/- in response to notice under section 148 of the Act. Notice under section 143(2) and 142(1) of the Act was issued on 01.07.2015 and was duly served upon the Assessee. In response to the above notices, assessee attended and submitted certain details. The Assessing Officer observed that assessee did not take actual unsecured loan from the above mentioned concern but has routed his unaccounted income earned from undisclosed sources into his books of accounts. Therefore, the unsecured loan to the tune of Rs.2,00,000/- from the said concern, which is controlled by Shri Bhanwarlal Jain was treated as non-genuine. Accordingly, this amount of Rs.2,00,000/- from the said concern, which is controlled by Shri Bhanwarlal Jain is treated as non-genuine and added to the total income of the assessee under section 68 of the Act as unexplained cash credit. The assessee has also paid an interest amount of Rs.1,067/- on the above referred loan amount. The same was also disallowed and added to the total income of the assessee. 4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has dismissed the appeal of the assessee. Aggrieved, the assessee is in further appeal before us. 5. Learned Counsel argues before the Bench that reasons recorded by the Assessing Officer are bad in law, therefore reassessment proceedings under section 147 of the Act, as initiated by the assessing officer should be quashed. 6. On merits, Learned Counsel submits that loan was taken by the assessee in AY.2009-10 and has been repaid in the subsequent years along with interest to the tune of Rs.2,17,260/-. Therefore, Learned Counsel contended that since the loan has been repaid in subsequent years, therefore genuineness of the loan should not be doubted and addition so made by the assessing officer may be deleted. Page | 4 ITA.178/SRT/2017/AY.2008-09 Late Baldevraj Jamnuram Ahuja 7. On the other hand, Ld. DR for the Revenue pleads that Assessing Officer has recorded the reasons in accordance with the provisions of section 147 of the Act, therefore, reopening made by the assessing officer is valid in the eye of law. 8.On merits, ld. DR submits that assessee has taken the bogus loan just to minimise the tax liability. Besides, the evidence to the effect that loan has been paid in subsequent year has not been argued before the assessing officer. The ld DR took us through para no.9 of assessment order, wherein it is stated that “ the assessee did not comply with this notice”, hence, assessee did not file the evidence that he had paid the loan subsequently. Therefore, during the reassessment proceedings, the assessing officer did not get opportunity to verify the fact that loan has repaid in subsequent years, therefore, the issue may be remitted back to the file of the assessing officer for examination of bank statement and ledger account etc. 9. We have gone through the facts of the case, the reasons recorded for reopening u/s 147 of the Act, the submission and the various decisions of the Courts including those relied upon by the assessee. The assessee has challenged the reopening of assessment. We note that ld CIT(A) has dealt the issue of reopening in his appellate order, vide para no. 6.3.1 to para no.6.2.10 of his order. We have gone through the order of ld CIT(A) and observed that reopening of assessment under section 147 of the Act is valid. The issue of reopening under section 147 of the Act is covered in favour of Revenue by the following judgments of the Hon'ble Gujarat High Court, which are as under: (1).Yogendrakumar Gupta vs. ITO 366 ITR 186 (Guj) (2)Peass Industrial Engineers (P) Ltd. 73 taxmann.com 185 (2016) (3) Order dated March 25, 2014 in the case of Lalita Ashwin Jain vs. ITO, Special Civil Application No. 1626 and 1627 of 2014. Page | 5 ITA.178/SRT/2017/AY.2008-09 Late Baldevraj Jamnuram Ahuja Considering these facts and circumstances, the conclusion reached by ld CIT(A) to upheld the validity of reopening of assessment under section 147 of the Act, does not require interference, therefore we confirm the findings of ld CIT(A). 10. So far merit is concerned, we note that during the reassessment stage, the assessee did not file the evidence to the effect that he had paid the loan subsequently. The ld Counsel submitted that assessee has repaid the loan along with interest to the tune of Rs.2,17,640/- ( Rs.2,00,000 + Rs.17,640). To support his contention, ld Counsel submitted before us, copy of ledger accounts ( vide paper book page 61 and 62) and also submitted bank statement vide page no.63 of assessee`s paper book. We note that during the reassessment proceedings, the assessing officer did not get opportunity to verify these documents, vide para no.9 of assessment order, hence we find merit in the submission of ld DR for the Revenue, therefore considering these facts, we are of the view that issue needs to be remitted back to the file of the assessing officer for examination of bank statement and ledger account etc. If the assessee has repaid the loan in subsequent years then genuineness of the transaction should not be doubted and the addition so made should be deleted. 11. We note that Hon`ble Gujarat High Court in the case of Ayachi Chandrashekhar Narsanhji [2014] 42 taxmann.com 251 (Guj) held that if the Department had accepted repayment of loan in subsequent year, no addition should be made in the hands of the assessee, in current year on account of cash credit. Therefore, we set aside the order of ld CIT(A) and remit the issue back to the file of the assessing officer with the direction to examine the ledger accounts and bank statement to ascertain the fact that whether payment has been made in subsequent years or not? On examination, if the assessing officer finds that repayment of loan has been made in subsequent years, then in that circumstances, the addition of Rs. 2,00,000/- should be deleted. 12. In the result, appeal filed by the assessee is allowed for statistical purposes. Page | 6 ITA.178/SRT/2017/AY.2008-09 Late Baldevraj Jamnuram Ahuja Order is pronounced in the open court on 25/05/2022 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat / Ǒदनांक/ Date: 25/05/2022 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat